Ag and Food Sectors and the Economy

The U.S. agriculture sector extends beyond the farm business to include a range of farm-related industries. The largest of these are food service and food manufacturing. Americans’ expenditures on food amount to 13 percent of household budgets on average. Among Federal Government outlays on farm and food programs, nutrition assistance far outpaces other programs.

Agriculture and agriculture-related industries contributed $789 billion to the U.S. gross domestic product (GDP) in 2013, a 4.7-percent share. The output of America’s farms contributed $166.9 billion of this sum—about 1 percent of GDP. The overall contribution of the agriculture sector to GDP is larger than this because sectors related to agriculture—forestry, fishing, and related activities; food, beverages, and tobacco products; textiles, apparel, and leather products; food services and drinking places—rely on agricultural inputs in order to contribute added value to the economy.
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With a 12.9-percent share, food ranked third behind housing (33.6 percent) and transportation (17.6 percent) in a typical American household’s 2013 expenditures. Food’s share of consumer expenditures is down from 15 percent in 1984, as the share of income spent on housing, health care, and entertainment each rose slightly.
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In 2013, 16.9 million full- and part-time jobs were related to agriculture—about 9.2 percent of total U.S. employment. Direct on-farm employment provided over 2.6 million of these jobs. Employment in the related industries supported another 14.2 million jobs. Of this number, food services and drinking places accounted for the largest share—11.1 million jobs—and food/beverage manufacturing supported 1.8 million jobs. The remaining agriculture-related industries together supported another 1.4 million jobs.
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In 2013, the U.S. food and beverage manufacturing sector employed about 1.5 million people, or just over 1 percent of all U.S. nonfarm employment. In over 31,000 food and beverage manufacturing plants located throughout the country, these 1.5 million workers were engaged in transforming raw agricultural materials into products for intermediate or final consumption. Meat and poultry plants employed the largest percentage of food and beverage manufacturing workers, followed by bakeries, and fruit and vegetable processing plants.
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USDA budget outlays increased 34 percent between fiscal 2005 and 2014, with the largest percentage increases in nutrition assistance programs and crop insurance. (Fiscal years begin October 1 and end September 30.) Nutrition-program increases since fiscal 2008 reflected increases in participation and temporary expansion of benefits. The improving economy and expiration of temporary benefits in November 2013 brought nutrition-program outlays down in fiscal 2014. Crop insurance outlays also fell in fiscal 2014, as extreme weather events subsided and crop prices moderated. Commodity program expenditures, down by 74 percent over the decade, increased in the last 2 fiscal years with falling prices, but remain only 6 percent of overall outlays. Together commodity, crop insurance, and conservation programs—those primarily benefiting producers—made up only 17 percent of USDA spending in fiscal 2014.
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